Monday, July 18, 2005

The Prophet Greenspan

Steal a little and they throw you in jail;Steal a lot, and they make you king. - Bob Dylan

In Confessions of an Economic Hitman, John Perkins reflects on the World Trade Center during his first visit to New York City following their destruction on September 11:

I went on around the block, to Pine Street. There I came face-to-face with the world headquarters of Chase, the bank David Rockefeller built, a bank seeded with oil money and harvested by men like me. This bank, an institution that served the Economic Hit Men and that was a master at promoting global empire, was in many ways the very symbol of the corporatocracy.

I recalled reading that the World Trade Center was a project started by David Rockefeller in 1960, and that in recent years the complex had been considered an albatross. It had the reputation of being a financial misfit, unsuited to modern fiber-optic and Internet technologies, and burdened with an inefficient and costly elevator system. Those two towers once had been nicknamed David and Nelson. Now the albatross was gone.

One of the most important lessons of 9/11 was that we should never take our eyes off the money. Billions were made in the destruction of the towers, without even accounting for the uptick in oil and arms that followed. (See here for the account of what happened to the WTC data recovery to "unlock the truth behind an unexplained surge in financial transactions," according to a hopelessly naive report of December, 2001.) Follow the money is a cliche because its truth became trite by matching an overly-familiar pattern. Like the scorpion that jabs the turtle carrying it to shore, the power elite can't forego an opportunity to make a sting. "It's in my nature."

"Does Alan Greenspan have some explaining to do?" begins a provocative analysis of the actions of the Federal Reserve in the hours before the London bombings by The Cunning Realist - an "executive in the financial industry" who describes himself as a "lifelong conservative with a strong independent streak." (And judging by his blogroll, which includes links to Andrew Sullivan, The National Review and Talking Points Memo, I'd say he pegged himself pretty well.)

He writes:

It is difficult to overestimate the importance to the financial markets of Fed-created liquidity. In a paper from August 2003, researchers at the Federal Reserve Bank of St. Louis wrote, "Open market operations are not another weapon in the Fed's arsenal, but the only weapon in its arsenal."

With that in mind, what happened last week is fascinating. Here are two charts of the Fed's recent level of activity. The first shows the expanding and shrinking daily size of the temporary liquidity pool. The date (ending on July 8th) is indicated on the bottom of the chart, and the size of the pool in billions is on the left:

The second graph represents the Fed's injections of permanent liquidity:

The Cunning Realist adds:

"The terrorist attacks in London took place on Thursday. The Fed dramatically increased the pool of liquidity available for stocks to a multi-year high 48 hours before that---an ideal amount of time for that liquidity to filter into the market---and kept it elevated for the next few days. And indeed, it worked. The stock market saw heavy buying right at the opening bell on Thursday and has shot straight up since then."Why did the Fed do this? Was it just another coincidence in our financial markets that somehow managed to immediately precede a major geopolitical event?"

Fintan Dunne of breakfornews.com has also picked up the story, and writes that the Federal Reserve "has previously supported financial markets by increasing liquidity to boost the stock market - as happened after 9/11. But... the Fed had already hugely increased liquidity 48 hours before [the London attacks], just in time for that liquidity to filter into the market."

I found it interesting that the Cunning Realist writes "financial professionals generally consider this 'man behind the curtain' stuff. Those who are aware of it don't like to discuss it, because it implies that stocks rise and fall based on something other than fundamentals and their own acumen."

They say you have to be lucky to be good, but they would say that. After all, they're the carnies calling the suckers into the tent of the marketplace. You pay your money and you take your chance. And if you play the game, you might get lucky, but you don't get to roll with Rockefeller and Greenspan. Because maybe to be good, more than being lucky, you need to be bad.

Remember all the talk a few years back about America's so-called Greatest Generation? Those stalwart survivors who met the challenges of the Great Depression, defeated fascism in Europe, kept communism in check until it imploded, and established the historically unprecedented "middle class" from which Americans derive all their most cherished traditions, beliefs and values?

I can remember my own sneaking suspicions upon first encountering this concept of a "greatest" generation. It was back in 1998, when those words entered the lexicon via NBC anchorman Tom Brokaw's doorstop-sized best-seller. Since that time, the title of his pandering paean has come to serve as a brand name of sorts. It also serves a handy rhetorical whip with which to flagellate butter-soft Boomers, not to mention the pierced and tattooed sloth-weasels of Generations X, Y and Z.

How could the sturdy, worthy stock of mid-century America have spawned a generation of hippie/yuppies who then, in turn, produced a generation of nihilistic sensualists? How did those industrious paragons of self-reliance come to produce the soft, entitled likes of us? Whence this perplexing xenogenesis? These are the questions Brokaw's book - and its copycats - seems to ask of the reader.

Actually, "copycat" might be an unfair characterization. Considering the publishing industry's torturous turnaround, the speed at which these books followed each other would indicate cultural synchronicity at least, if not collusion. And while it might appear paranoid and naïve to believe that Dan Rather, Peter Jennings and others conspire to shape consensus reality, fact is these five-star generals of the Fifth Estate often do consult with each other, to significant effect.

Case in point, the recent Homeland Security "summit meeting," where celebrity anchors and newsmedia brass attended an off-the-record dinner with Big Tom Ridge. The purpose of this meeting was to coordinate media efforts in anticipation of the next major terrorist attack on American soil. And isn't it comforting to know that when a suitcase nuke finally goes off in the Lower 48, Aaron Brown will be there to point us all towards the camps. But I digress.

It was last week, while watching Alan Greenspan address Congress, that I undestood something fishy was afoot. According to the unelected Federal Reserve chairman-for-life, the opportunity had finally arrived for this generation - the Lamest Generation - to be noble, to sacrifice for the common good, to prove worthy of that which came before.

Here, in part, is what Big Money Yoda (a.k.a. The Pope of Greenback Village) said:

"In view of this upward ratchet in government programs and the enormous uncertainty about the upper bounds of future demands for medical care, I believe that a thorough review of our spending commitments - and at least some adjustment in these commitments - is necessary for prudent policy. This dramatic demographic change is certain to place enormous demands on our nation's resources - demands we almost surely will be unable to meet unless action is taken."

Greenspan here implies that Social Security and Medicare are on the verge of bankrupting the nation. Thus, those entitlements must be reduced, if not eliminated. But a brief perusal of recent history reveals that Social Security's collapse isn't exactly imminent. The program takes in far more than what it pays out, and is projected to do so for decades. And yet, when anyone dares suggest dealing with the exploding Bush deficit by reversing his irresponsible tax cuts, they get this kind of gobbledygook in reply:

"The exact magnitude of such risks is very difficult to estimate, but they are of enough concern, in my judgment, to warrant aiming to close the fiscal gap primarily, if not wholly, from the outlay side. For a variety of reasons, that action is better taken as soon as possible."

Translated from the Greenspanese, that means: "Reversing Bush's consciously irresponsible tax cuts wouldn't be feasible, because if that happened, America's wealthiest citizens - the capital investors whose purity of vision and forceful leadership keep Western civilization afloat - would likely become angry, and refuse to use their wealth to generate more wealth. According to the principles of supply-side, trickle-down, Voodoo economics, the wealthy would go on a devastating wealth strike."

The above scenario might seem vaguely familiar to some of you. It echoes the plotline of Ayn Rand's novel, Atlas Shrugged. Rand was an eccentric, egocentric Russian émigré who became the leader of a pseudo-philosophical cult of personality called "Objectivism." Her beliefs were a weird mélange of atheism, libertarianism, and what she called enlightened selfishness. In Atlas Shrugged, the "creative people" of the world decide to withhold their genius from the unworthy masses and retreat from society. They relocate to a faraway hidden valley where they create their own private utopia. Without them, the civilization they left behind spirals into anarchy and collapses.

Despite its obvious comic potential - think Bill Gates and Warren Buffet bunking together and having to empty a mountain cabin chamber-pot every morning - Atlas Shrugged was not meant as satire. Rand took her fiction, her philosophy, and herself very seriously, even when few others did.

One of the first people to take Ayn Rand seriously other than Rand, herself, was Alan Greenspan. He thought her philosophy so appealing that he became a member of her cult's inner circle, known as "the Collective." Legend has it that Greenspan first read Atlas Shrugged literally while Rand was writing it. He would read the freshly finished pages as she peeled them from her typewriter. In 1957, Greenspan defended Atlas Shrugged's merits in a letter to the New York Times, after that paper had published a negative review. The letter strikes a disturbing chord:

"To the Editor: Atlas Shrugged is a celebration of life and happiness. Justice is unrelenting. Creative individuals and undeviating purpose and rationality achieve joy and fulfillment. Parasites who persistently avoid either purpose or reason perish as they should. Mr. Hicks suspiciously wonders 'about a person who sustains such a mood through the writing of 1,168 pages and some fourteen years of work.' This reader wonders about a person who finds unrelenting justice personally disturbing. Alan Greenspan, NY"

Half a century ago, Alan Greenspan used the language of genocide to express his "joy" at the idea of "creative individuals" with "undeviating purpose" one day meting out "unrelenting justice" to social "parasites," causing them to "perish." Today, two decades after he reformed Social Security in a way that increased its burden on the working class and left the program ripe for Republican plunder, he's using romanticized, revisionist myths about the "rugged individualism" of the Greatest Generation as a pretext for dismantling one of that generation's greatest legacies. "The money can't be spared. You don't deserve it anyway. Come on… noblesse oblige!"

If the Greatest Generation was, indeed, the greatest generation, it's only because they had to be. Rugged individualism didn't pull America out of the Great Depression. It took a New Deal - proactive government responding to legitimate needs - to do that. European fascism wasn't defeated by rugged individualism, but by cooperation between Allies, including a great many communists. The trillions spent playing "bankruptcy chicken" with the USSR during the course of the Cold War didn't come from rugged individuals. It came from taxes. The government. The state. A collective.

And where were Greenspan's rugged individuals during all this?

They were doing everything in their power to avoid paying the taxes that paid for it all. They were closing down factories at home, and opening unregulated sweatshops abroad. They were hiding their assets offshore. They were treating government contracts like a license to steal from the American people. Then they decided to use their ill-gotten loot to buy more influence, so they could score more contracts, so they could make more money, so they could eventually afford to get a puppet Preznit installed in the White House. This gave them the oportunity to dismantle and/or de-fang all those pesky government regulatory agencies, then raid the treasury. They've already begun cannibalizing public education and public health. Now they've going after Social Security.

I guess after that comes the part when the parasites - who persistently avoid either purpose or reason - will perish as they should.

These bankers cut the poor and middle classes off at the knees by telling us, to our faces though sideways, that we must sacrifice our medical care, our retirement, our infrastructure, our true security so that they may become wealthier. They are telling us that they ARE the elite, and we must bow before them.

As we contemplate the horrendous scam that is the FedRev, it is obvious why the 'controllers' are so cock-sure. Words fail (at least me anyway) to describe the bluff blatancy of the existence of the FR. No wonder they figure they can pull off anything they wish. 9-11 is miniscule by comparison. The FR scam "has no clothes", but where are all our financial experts to say so? Are they all afraid they will be labelled as a 'fool'? The FR is truly an unsurpassed pack of bullshit. Our Cunning Realist sees a worm wiggling in the pile of bullshit, and claims, "ah ha! look what have we here?! I believe I see a worm." But which, after all, is the more offensive? The worm in the pile, or the pile itself? "But something is wrong - there should not be a worm here." Look man, don't you see what the worm is wiggling around in? If detecting the worm ultimately enables discerning the pile of bullshit in which it resides, hey, great! What is the greater issue? The worms?, or the pile of bullshit that gives nurture to the worms? The pack of bullshit is what should not be here. So come on, wake up and smell the bullshit. And then train a hard eye on the bullshiters. (That would be the stockholders of the FR, not their little puppet Greenscam)

RebelYell posted to the RI forum a link to a most interesting thread on the FR and the banker barons. Don't miss it.http://goldismoney.info/forums/showthread.php?t=3988

The thread happens to include a speech from 1995 by Louis Farrakan, which contains the observation and quote:

"Thomas Jefferson, and others, in writing, the Constitution, please listen, made a provision, that putting the control, of money and credit, under the control of congress, was absolutely, what the founding fathers, wanted. Because Congress was the representative of the people. The founding fathers, fought against the idea, of private control, and ownership, of a CENTRAL BANK. Because they saw, how the private ownership, of central banks, in Europe, caused the undoing of nations. As these banks, finance wars, that ultimately cause the destruction, of millions of lives. Thomas Jefferson, in a letter to John Adams, wrote, quote, I sincerely believe, with you, that banking establishments, are more dangerous, than standing armies."

1913 brought the smuggling in of the FR, and the 16th Amendment abrogating the Constitution to make way for mass enslavement by way of income taxation. The first world war followed shortly after.

"It is in a general way known to the public that Mr. Warburg was in some way connected with the passage of the Federal Reserve Act, and his appointment to his present responsible position on the Federal Reserve Board was acclaimed on all sides with a rare degree of approval and congratulation; but I fancy it is known only to a very few how great is the indebtedness of the United States to Mr. Warburg. For it may be stated without fear of contradiction that in its fundamental features the Federal Reserve Act is the work of Mr. Warburg more than of any other man in the country . . . .

"When the Aldrich commission was appointed it was not long before Senator Aldrich -- to his credit be it said -- was won over by Mr. Warburg to the adoption of these two fundamental features. The Aldrich Bill differed in some important particulars from the present law . . . . The concession in the shape of the twelve regional banks that had to be made for political reasons is, in the opinion of Mr. Warburg as well as of the writer of this introduction, a mistake; for it will probably, to some extent at least, weaken the good results which would otherwise have followed. On the other hand, the existence of a Federal Reserve Board creates, in everything but in name, a real central bank; and it depends largely upon the wisdom with which the board exercises its great powers as to whether we shall be able to secure most of the advantages of a central bank without any of its dangers . . . .

"In many minor respects also the Federal Reserve Act differs from the Aldrich Bill; but in the two fundamentals of combined reserves and of a discount policy, the Federal Reserve Act has frankly accepted the principles of the Aldrich Bill; and these principles, as has been stated, were the creation of Mr. Warburg and of Mr. Warburg alone."

"Picture a party of the nation's greatest bankers stealing out of New York on a private railroad car under cover of darkness, stealthily hieing hundred of miles South, embarking on a mysterious launch, sneaking onto an island deserted by all but a few servants, living there a full week under such rigid secrecy that the names of not one of them was once mentioned lest the servants learn the identity and disclose to the world this strangest, most secret expedition in the history of American finance. I am not romancing; I am giving to the world, for the first time, the real story of how the famous Aldrich currency report, the foundation of our new currency system, was written . . . . The utmost secrecy was enjoined upon all. The public must not glean a hint of what was to be done. Senator Aldrich notified each one to go quietly into a private car of which the railroad had received orders to draw up on an unfrequented platform. Off the party set. New York's ubiquitous reporters had been foiled . . . Nelson (Aldrich) had confided to Henry, Frank, Paul and Piatt that he was to keep them locked up at Jekyll Island, out of the rest of the world, until they had evolved and compiled a scientific currency system for the United States, the real birth of the present Federal Reserve System, the plan done on Jekyll Island in the conference with Paul, Frank and Henry . . . . Warburg is the link that binds the Aldrich system and the present system together. He more than any one man has made the system possible as a working reality." 2

Sent to me by an economics Ph.D when I asked about the puts/options prior to 9/11:

"I am an old, dyed-in-wool conspiracy theorist to the bottom of my soul; but I'm also trained as a scientist. As such, I am torn between wanton credulity and pounding skepticism.

"Most of what the conspiracy theory network has to say about September 11, 2001, is pretty easy to dispense with; but that doesn't mean we have the whole story. No government is going to tell the entire truth, even under the best of circumstances; and a situation like this is not going to be, in any way, shape, or form, conducive to the angels of a government's better nature regarding transparency.

"What really happened is probably a lot grimmer and a whole lot more confusing than what we are told. Anyone who believes that any U.S. Administration would tell the whole truth about an act of such aggression is just plain naïve. That having been said, the conspiracy theorists just go hog wild down too many ridiculous, blind, and just plain wrong alleys.

"However, the put options activity bothers me to the bottom of my heart, and that's because I am one of the few financial economists who believe in the so-called "strong form" of the efficient markets hypotheis. In other words, I am convinced that markets, at least on the global scale, impound with blinding speed all public and a whole lot of private information in securities prices.

"The amount of money that was made in put options because of the supposedly "unexpected" attack of September 11, 2001, staggers the imagination. By my own estimates, more that a hundred billion dollars came out of that one event; and that money went somewhere.

"A hundred billion dollars is a lot of money. It's enough to finance something that scares me half to death. And that money is out there; somewhere, that money exists. That's not conspiracy theory; that's finance.

"We'll never know one way or the other if there was some conspiracy behind the destruction of three buildings and the murders of more than three thousand people on that cursed day almost four years ago".

"I fear, however, that we will know, someday, where that blood money went".

"So great was popular resentment against bankers since the Panic of 1907 that no Congressman would dare to vote for a bill bearing the Wall Street taint, no matter who had contributed to his campaign expenses. The Jekyll Island plan was a central bank plan, and in this country there was a long tradition of struggle against inflicting a central bank on the American people. It had begun with Thomas Jefferson's fight against Alexander Hamilton's scheme for the First Bank of the United States, backed by James Rothschild."

"I fear, however, that we will know, someday, where that blood money went".

September 6, 2001 - 2075 put options were made on United Airlines.

http://tbrnews.org/Archives/a048.htm

Between August 26 and September 11, 2001, a group of speculators, identified by the American Securities and Exchange Commission as Israeli citizens, sold "short" a list of 38 stocks that could reasonably be expected to fall in value as a result of the pending attacks."

I have to say that discussions of the Federal Reserve always make me a little nervous, because they so often trace back to right-wing sources anxious to discredit "Jewish bankers." In particular, the post just above this one, citing the often-discredited neo-Nazi site tbrnews, sets off warning bells. And so does the one a little further up which links the creation of the Federal Reserve to the establishment of the progressive income tax.

None of this is to say that I don't believe there was something questionable about the way the Federal Reserve was brought into being. A great deal of dubious behind-the-scenes political activity was going on in the period roughly between 1911 and 1919.

However, this is an area in which we have to be particularly careful of our sources, because so many of them have a hidden agenda which it would be risky to endorse uncritically.

Great article, great comments! My goosebumps are having a party. An interesting aside; somehow congressmen in the US are TWICE as likely to make a profit on stocks as oppossed to PROFESSIONAL Wall St. investors. How is this so? regards Greg.

Isn't it great how our public school system never covers any of this stuff? If you're lucky you get a half-chapter in Economics about how the Fed works. Maybe you get a week in History about Jackson, Madison, W J Bryant, and everything else related to banking combined. If you had a particularly good teacher, you might have heard about monopoplies and worker exploitation around the turn of the 20th century.

But chances are it was May by then. You had another month, tops, to cover the depression and WW's I and II. You hear about the Troubles, and you are given a happy ending with the victory in WWII. You've probably been told that a good war was all it took to jump start our economy out of the depression, and all the problems were solved.

For all the times through the years I've taken American History, you would think just one of those teachers could have gotten past the '50s...

Great article, I just want to point out that the comment above quoting tbrnews about the insider traders having been identified as Israelis is pure hogwash; they haven't been identified as anything. We don't know anything about who they might be. Their being Israelis is obviously something the Barnes Review made up, for reasons that are not too difficult to imagine.

I had a neutral view of Greenspan originally, until I read former Clinton Labor secretary Robert Reich's book Locked in the Cabinet. Reich in his memoir paints a portait of a very elitist Greenspan that is very consistent with the above commentary of Greenspan being a devotee of Ayn Rand's screwball "philosphy." One charasteristic description from the book of the dining room of chairman Greenspan's office quarters: "The room is tastefully decorated - an antique clock, a Louis XIV sideboard, fresh cut flowers. The view of the Mall is spectacular. The table is set for two -- linen tablecloth, heavy silverware, china plates and bowls, cloth napkins. The egalitarian zealotry of the rest of the executive branch has not reached this rarefied precinct."

"Great article, I just want to point out that the comment above quoting tbrnews about the insider traders having been identified as Israelis is pure hogwash; they haven't been identified as anything. We don't know anything about who they might be."

"We don't know anything about who they might be."

We know that they are people who are in collusion with those who did the deed.

And we know that our 'not knowing' is not related to our plain inability to know. The report of who traded what when would take thirty seconds to run.

So we know they are in collusion with the perps, and we know they are being protected by our own Governement and by the mainstream media.

I've only read "Atlas Shrugged", and I certainly do take issue with her philosophy but I would hardly call it "crackpot". She was a believer in individual self-evolution of being, which is an undeniable potential--but to speak too bluntly of it implies a kind of elitism, since such evolution holds that people can be "more" and "less" developed in comparison to each other....

I suppose her biggest error--and it was a fundamental one--was that she believed the path of evolution was actualized through "doing". This might be excused because really it's only an extension of the American Protestant-Rationalist philosophy, which was mushrooming into a veritable religion during the early 20th Century industrial age.

Interestingly enough, this "illusion of doing" (the belief that "achievement" is somehow a reflection of being) is also the error of the industrial elites with their unquenchable pursuit of "power" and "control"...not to mention that it's the critical error behind the philosophy of Central Bank "management" of market forces....

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